Case studies

David and Karen are both 55 and are married. David was a self-employed business owner and Karen was in full-time employment.

Between them, David and Karen had four Defined Benefit pensions. David also had four small personal pensions totalling around £27,000. They owned their main residence, with a small mortgage outstanding on it, and had around £23,000 in cash savings.

David wanted to sell his franchise and Karen had been informed that she was eligible for voluntary redundancy.

Having seen friends and family experience health problems, David and Karen were passionate about ticking things off their bucket list sooner rather than later. Their main objective was to buy a camper van, travel around Europe for two years and then return to the UK. Upon returning, they planned to find part-time employment for a few years before fully retiring in their early 60s.

David and Karen wanted to know how they could achieve this. They still had an outstanding mortgage to clear and their Defined Benefit, personal and state pensions were due to commence at various points between the ages of 62 and 67.

We reviewed all their pensions, establishing what income they were due to provide and when. We also obtained transfer values for each of the schemes. We then completed a budget planner and cashflow model to establish the level of income David and Karen would need: firstly whilst travelling, secondly when they return to the UK (assuming a level of part-time earnings), and finally in full retirement.

We discussed their attitude to investment risk, their past experience of investing and their capacity for loss, in order to ensure any recommendations were suitable.

We concluded that they should take the following actions:

• Transfer two of David’s Final Salary pensions to a new personal pension that allowed flexible access (Flexi-Access Drawdown) and invest in a portfolio that was suitable for David.
• Take the tax-free lump sum from the new Flexi-Access Drawdown.
• Use the proceeds from the sale of David’s business, Karen’s redundancy and David’s pension lump sum to clear their mortgage, buy a camper van and keep back £24,000 to help cover the cost of living whilst travelling.
• Rent their main residence out and use the income, along with the £24,000 of ear-marked savings, to cover their cost of living for the next two years.
• Use David’s remaining Flexi-Access Drawdown to provide income for David and Karen between the ages of 60 to 69.

David and Karen are currently travelling around Europe in their camper van!

Their house is rented out and the income, along with some cash savings, is covering their expenditure whilst away.

They are reassured by the fact they still have £30,000 of other cash savings to act as emergency reserves.

They are confident that from the ages of 62-67 and beyond, all their other pensions will commence and provide more than the £22,000 per annum we have established they will need.